Javascript is disabled. Please enable Javascript to log in.
Published: 2012-12-24

License v. Assignment? The Winnie-the-Pooh Trademark Dispute



License? Assignment? Collateral Estoppel? Oh bother, indeed.

After a long running dispute between Stephen Slesinger, Inc. and Disney Enterprises over various trademarks derived from the Winnie-the-Pooh works, the Federal Circuit Court of Appeals confirmed a lower ruling that Disney was in fact the owner of Winnie-the-Pooh and the Pooh characters, and prior rulings prevented Slesinger from arguing that its 1983 agreement with Disney was only a license to use the trademarks.

Background

In 1930, author A.A. Milne transferred to Stephen Slesinger exclusive merchandising and other rights based on the Winnie-the-Pooh works in the United States and Canada. In 1961, Slesinger exclusively "assigned, granted, and set over to" Walt Disney Productions the rights in the 1930 agreement with A.A Milne.

After issues developed between Slesinger and Disney, they entered into another agreement in 1983. In that agreement, Slesinger acknowledged its transfer and assignment of "rights it had acquired from A.A. Milne to Disney by agreement dated 14 June 1961." The agreement revoked all prior agreements, gave Slesinger "all of the rights in the work which were transferred to [Slesinger] in 1930 and amended from time to time," and then transferred Slesinger's rights back to Disney, providing that Slesinger "assigns, grants, and sets over unto Disney the sole and exclusive right in the United States and Canada to project, exhibit, and broadcast visually and audibly any motion pictures . . . as well as various further rights in and to said work, which include merchandise . . . television, radio, and analogous processes."

Between 1983 and 2006, Disney registered at least fifteen trademarks. In 2004, Disney registered copyrights in forty-five works and renewed fourteen copyright registrations. During that time, Slesinger did not perfect or register any trademarks or copyrights.

In 1991, Slesinger sued Disney in California state court, claiming it breached the 1983 agreement by not accurately calculating revenue from Winnie-the-Pooh products, and underpaying royalties. The California state court dismissed Slesinger's claim and the California Court of Appeals affirmed.

Slesinger also filed suit in federal court in the Central District of California in 2006, claiming that Disney's exploitation of the Winnie-the-Pooh characters infringed Slesinger's trademarks and copyrights. In response, Disney argued that Slesinger had admitted in the previous state court case that Disney's use of the Winnie-the-Pooh characters were authorized, and that the 1983 agreement had granted all Slesinger's rights to Disney and retained none that Disney could infringe. The district court ruled in favor of Disney, concluding that given the parties' conduct and the clear terms of the agreements, Slesinger had transferred all of its rights in the Pooh works to Disney, and could not now claim infringement of any retained rights.

The district court opinion stated:

"Disney puts forth two main contentions in its Motion:
First, that Slesinger granted to Disney all of
the rights it had in the Pooh characters, and retained
no rights which Disney could infringe, and
second, that Slesinger's counterclaims are inconsistent
with its earlier position in the Superior
Court action that Disney's uses of the Pooh characters
were authorized and royalty-producing. The
Court agrees with both propositions."

The district court based its decision on the fact that Slesinger never objected to Disney's trademark and copyright registrations until 2006, and on the "the conduct of the parties over the nearly 50 years of their relationship."

Specifically, the district court relied on the theory of judicial estoppel, finding Slesinger's arguments inconsistent with statements made and positions taken by Slesinger in the state court litigation.

Trademark Trial and Appeal Board

The instant case before the Federal Circuit Court of Appeals began when Slesinger filed a claim with the Trademark Trial and Appeal Board in 2006, attempting to register the marks POOH, WINNIE THE POOH, CLASSIC POOH, MY FRIENDS TIGGER & POOH, and other marks comprising the names or images of "Pooh" and related fictional characters.

Slesinger's claim rested on his argument that the 1983 agreement with Disney is a license, which does not grant Disney the right to register the marks. Disney disputed this assessment of the agreement, and argued that it was, in fact, an assignment of all the Winnie-the-Pooh rights. The Board determined that collateral estoppel barred Slesinger's claims and ruled in favor of Disney.

Collateral Estoppel

The Federal Circuit Court of Appeals noted that collateral estoppel requires four elements: (1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party.

Slesinger focused argument on the second and third prongs. Specifically, he argued that the district court did not specifically declare that Slesinger "has no rights at all", thus implying some rights may survive the 1983 agreement.

The Federal Circuit Court was not persuaded, concluding that "the district court did not find that Slesinger 'retained' some rights," and had granted all of its right to Disney as an assignment.

Assignment v. License

An "assignment is 'an outright sale of all rights in . . . [a] mark,' whereas license 'is a limited permit to another to use the mark,'" said the Court. The district court clearly explained that Slesinger had conveyed all rights to the works to Disney, and thus, the Court had no difficulty in determining that the Agreement was in fact an assignment, and not a license.

Moreover, usage of the words "transfer" and "grant" by the district court instead of "assignment" did not indicate that the district court viewed the agreement as a license. The language used by the district court was not dispositive; it was the judgment that mattered.

Finally, the Court held that the district court had necessarily determined the issue of Slesinger's ownership interests in the rights to Winnie-the-Pooh, before it could determine whether Disney's uses were infringing said rights. Finding that Slesinger had no ownership rights was an essential element of the district court's judgment, and therefore collateral estoppel barred Slesinger's claim against Disney, wrote Chief Judge Rayner.

In dissent, Judge Reyna wrote "the district court did not decide ownership of the Pooh trademarks, and … I believe that a decision on ownership was not necessary to the district court's decision concerning trademark infringement." Unconvinced that the language used by the court rendered the agreement an assignment, Judge Reyna believed that it could also indicate a license to use. "The district court's failure to definitively and expressly state whether the transfer was a license or assignment is striking and illuminating." Furthermore, determination of ownership was not necessary to decide the issue of trademark infringement, he wrote, and thus the Board should not have precluded Slesinger from litigating the issue of ownership of the Winnie-the-Pooh trademarks.

Conclusion

The lesson here? Avoid ambiguity in contracts at all costs. While that may seem obvious, in practice, that clearly does not always occur. When it comes to assignments and licenses, be explicit in your use of language, so that there is no doubt as to the rights of each party.

Anne O'Donnell is a recovering litigator who is now currently a Senior Writer for legal professional content at Findlaw.com. She practiced for 10 years in civil litigation in San Francisco.